Mumbai: Markets fell on Thursday, ending May with the worst monthly performance since November, after weak economic growth data reinforced concerns about the country’s challenges at a time of intense global risk aversion.
Sensex at closing
Indian markets fell on Thursday after new data showed quarterly GDP growth had fallen to a nine-year low. Mint’s Lisa Pallavi Barbora looks at the day’s big movers
India’s economy grew at a nine-year low of 5.3% in the January-March quarter, with the data coming on a day when the rupee fell to a record low against the dollar, and as protesters took to the streets across India to demand the scrapping of a recent petrol price hike.
Markets fell 6.4% in May, a month marked by intense worries about the fate of the euro zone, which is exposing India’s vulnerabilities as an economy that needs capital inflows to bridge its current account deficit.
Foreign investors sold a net Rs 433 crore ($77.15 million) so far in May, and though they are not yet selling massively, their purchases of Indian assets has clearly slowed.
Investors from overseas bought a net of $619.3 million in debt and equity in May, far below the $7.2 billion in net inflows in February.
“India is primarily known as high growth economy, it deserves valuations premiums, the valuations are always at a premium to many of the other emerging nations. But if doubts emerge on growth itself then definitely it is not a good news,” said Kaushik Dani, a fund manager at Peerless Mutual Fund.
India’s main 30-share BSE index fell 0.57% to close at 16,218.53 points, after earlier falling as much as 1.32% after the weak GDP data.
The broader 50-share NSE index declined 0.54% to 4,924.25 points.
Trading was volatile, especially in the afternoon session because of the expiry of derivatives.
The weak economic growth data, however, is raising some hopes for a potential rate cut from the Reserve Bank of India at its mid-June policy meeting, though it was not enough to lift equity markets on Thursday.
Manufacturing remains particularly weak, with the sector shrinking 0.3% from a year earlier.
India’s top engineering conglomerate Larsen & Toubro declined 1.3% while capital goods maker Crompton Greaves fell 2.23%.
Tata Motors shares fell 4.1%, bringing its falls in the past two sessions to 15.5% after disappointing investors with its earnings results on Tuesday.
Maruti Suzuki shares fall 4.41% as the drop in the rupee is expected to raise the cost of imports and increase the cost of royalty payments.
Among other decliners, shares in cash-strapped Kingfisher Airlines’ fell 5% to a record low, a day after saying net loss more than trebled in the January-March quarter because of higher fuel prices and a weaker rupee.
ICICI Bank dropped 4.16% as the stock went ex-dividend on Thursday.
However, shares in Hindalco Industries and Reliance Power rose 2 and 3.4%, respectively, on media reports that a government panel had given permission to the two companies to start mining at two coal blocks allotted to them.